Exclusive: The Big Easy Does It
By Kirsten Early, Partner and Director of Retail, SRSA Commercial Real Estate
As those familiar with the New Orleans commercial real estate market will readily acknowledge, the city continues to maintain a positive trajectory, with a great deal of activity in and around the metro area. Despite — or perhaps because of — a low vacancy rate and a relative scarcity of commercial opportunities in downtown proper, competition is fierce for quality properties, and an impressive number of new-to-market retailers have recently arrived or are actively looking to make a move.
While some of the heat has cooled off from what has been one of New Orleans’ most active and dynamic periods of high-octane retail development, select new projects continue to move forward, and it is clear that the Big Easy is positioned well for continued steady growth going forward.
A veteran market
While some of the frenzied momentum from the past two years has slowed, it would be a mistake to characterize the current level of activity as anything other than robust. And that activity is present with impressive consistency across the market — from downtown to the immediate suburbs and surrounding parishes.
Veterans Memorial Boulevard is still the primary retail development corridor in the market with Lakeside Shopping Center as the center of the market. The seven-mile stretch of highway running from the airport to the intersection of Jefferson Parish and Orleans Parish constitutes one of the most desirable spans of commercial real estate in the city. One of the only true remaining available plots of land on the Boulevard is the Tolmas tract, the site of what promises to be an exciting new project. Look to see concrete details emerging in the months ahead, with a grocer, bank and restaurant tenants all rumored to be involved.
Big names and market firsts
In recent years, an impressive list of national brands have made their entrance (and, in some cases, a long-awaited reentrance) to the New Orleans market. Dave & Buster’s announcement of opening a location on Poydras & Loyola is the “buzz” in the market. Marshall’s, PetSmart and Costco have all either recently arrived or returned after a post-Katrina absence, and H&M, Tiffany’s, West Elm and Arhaus Furniture all recently opened their first location in not just New Orleans, but in the State of Louisiana. J Crew’s Madewell concept just opened in Lakeside Shopping Center, and Skechers, Hobby Lobby and Youfit Health Clubs are making an appearance in the city’s West Bank area. Skechers is a prime candidate for further expansion in the market. Hobby Lobby recently opened its second store in Elmwood Shopping Center, and other big names — Trader Joe’s, Home Goods and Nordstrom Rack — are rumored to be actively looking to come to New Orleans.
Population and popularity
While the population figures in metropolitan New Orleans are not yet to their 2005 level, they are still steadily climbing. A sizable new influx of younger urban residents is helping to revitalize the city, and has played a big role in its ongoing commercial real estate boom. Consequently, residential development has been on the rise, and New Orleans will soon add more than 1,800 residential units to the development pipeline in the next 18 months. The medical corridor on Canal Street is a particularly active spot for new apartments, and with a number of residential projects coming online in the near future, there will be opportunities in that area for quality ground-floor retail space.
A developing situation
The New Orleans development landscape has changed dramatically in recent years. Downtown New Orleans has been particularly busy, with the city’s Central Business District, Warehouse District, Bywater Neighborhood and Canal Street all featuring noteworthy new additions. With a city known for its food, it is no surprise to see a new restaurant announcement opening weekly. This includes first time entrants to the market, as well as some additional restauranteurs such as John Besh, Aaron Sanchez and the Brennan family. There are also a number of fast casual and farm to table restaurants opening citywide.
The Howard Hughes Corporation’s The Outlet Collection at Riverwalk opened in May of 2014 and has been performing well since. An $80 million redevelopment, Riverwalk has been marketed as “the nation’s first downtown outlet center,” and features a tenant roster that includes high-profile regional firsts like Neiman Marcus Last Call Studio, Coach Factory Store and Tommy Bahama Outlet.
On Loyola Avenue, the mixed-use South Market District project continues to make significant progress. Phase 1 — The Park — is headlined by an Arhaus Furniture and a CVS Pharmacy on the ground floor of a newly constructed parking garage. The Paramount, which includes 209 residences, will be home to Barre 2, Blaze Pizza, Company Burger, Stone Free apparel and Willa Jean Bakery (a John Besh concept). Phase 3 is under construction, and will add another residential property, The Beacon, with 120 apartments, as well as approximately 20,000 sq. ft. of additional retail.
Another intriguing project in the South Market area is located at 1200 Poydras Street. The innovative layout of the 40,000-sq.-ft. project will include a parking garage feature with a 40,000-square-foot, second-level Dave & Buster’s and 20,000 sq. ft. of additional ground floor retail. Construction is also underway on Magnolia Marketplace on Claiborne Avenue in Central City. The 100,000-sq.-ft. Stirling Properties and JCH Development project is fully leased and is on track to open in 2015. Notable tenants include names like Ulta, Ross Dress for Less, TJ Maxx, PetSmart and Michael’s.
Other noteworthy developments and redevelopments across the greater New Orleans metro area include the Premier Center in Mandeville with the addition of Whole Foods to their tenant mix; Nor du Lac project in Covington, anchored by Academy, Hobby Lobby and Kohls; the 65,000-sq.-ft. redevelopment of a former Home Depot in Mid-City on Carrolton Avenue; and Fremaux Town Center on the eastern side of St. Tammany Parrish. Phase 2 of Fremaux is set to come online in late 2015.
Food for thought
Across the city, we continue to see low vacancies and high rents, with Magazine Street — a five-mile stretch of boutiques and high-end retail options — being an especially popular (and pricey) location. Even the under-served New Orleans East area recently opened a new Walmart and is beginning to heat up.
In particular, the grocery market is extremely competitive in the Metro New Orleans area. In February of 2014, Whole Foods Market opened its third New Orleans-area location off of Canal Street, and St. Tammany parish will soon have its first Whole Foods Market. Jefferson parish will soon have its first The Fresh Market. In a dense, geographically limited and competitive market, space is at a premium and retailers have had to scrap and claw for space. It also creates some fascinating dynamics, where big national names like CVS, Trader Joe’s, Whole Foods and Walmart have made extremely lucrative offers to local businesses to acquire their property — and been rejected! This kind of unusual circumstance is emblematic of both the character and competition that continue to distinguish the dynamic state of the New Orleans commercial real estate market.
Kirsten Early is Partner and Director of Retail with New Orleans-based SRSA Com